Russia's Lukoil regains $3.7 billion Iraqi oilfield contract

Russia’s largest oil company Lukoil was reinstated as the future developer of Iraq’s huge West Qurna-2 oilfield. The $3.7 billion contract was abruptly cancelled in December after the Iraqis accused L

Russia’s largest oil company Lukoil was reinstated as the future developer of Iraq’s huge West Qurna-2 oilfield. The $3.7 billion contract, originally signed in 1997, was abruptly cancelled in December and the Iraqi government demanded Lukoil be replaced by another Russian company.

The contract was scrapped presumably because Lukoil was conducting quiet talks with the United States and Iraqi opposition. The Iraqis accused Lukoil of trying to guarantee its rights to the field in case a US-led military strike on Iraq topples President Saddam Hussein’s regime and institutes a new government. The deal cannot be implemented as long as UN sanctions are in place.

The looming attack on Iraq has not discouraged the Russians from advancing their oil interests in the beleaguered Gulf country. Also this week, a high level Russian delegation of government and oil industry officials sealed three concessions during a two-day visit to Baghdad. Two other licensing contracts were advanced.

Block 4 in the Western Desert oilfield was awarded to Gazprom's construction arm Stroitransgaz, while Soyuzneftegaz was contracted to develop the Rafidain field in southern Iraq. Preliminary approvals were given to state-owned Zarubezhneft for a concession to develop the giant Nahr Umr Field and for Tatneft for block nine in the Western Desert.

West Qurna-2 oilfield is estimated to contain about 2.5 billion tons of oil reserves. It is expected once operated, it will have the capacity to produce up to 600,000 barrels per of oil day (bopd). Iraq sits atop the world's second-largest oil reserves, after Saudi Arabia. — (menareport.com)